ARTICLE 9: DISCOVERY, APPRAISAL AND DEVELOPMENT
(a) If Petroleum
is discovered in the Contract Area, Contractor shall:
(i) prior to notification to any third party forthwith
notify TPDC which will thereafter notify the Commissioner;
(ii) within thirty (30) days after the date of such
discovery provide TPDC and the Minister with all available information
regarding the discovery, including a
preliminary classification of the discovery as Crude Oil or Natural Gas to meet
the requirements of Section 31(1) and 31(2) of the Act;
(iii) within ninety (90) days after the date of such
discovery provide TPDC and the Minister with all information to ascertain the chemical
composition, physical properties and
quantitytomeettherequirementsofSection32oftheAct;
(iv) within one hundred and twenty (120) days from the
date of such discovery, also notify in writing to TPDC and the Minister whether
or not it considers the discovery of Crude Oil or Natural Gas is of potential
commercial interest;
a. if the Contractor notifies TPDC that the discovery is
of potential commercial interest, the Contractor shall at the same time notify
TPDC whether the discovery is of eventual commercial interest ("Eventual
Interest') or of present commercial interest ("Present Interest");
b. if Contractor informs TPDC that, in its opinion,
utilizing Best International Petroleum Industry Practices, the discovery is not
of potential commercial interest as a standalone or as part of an aggregated
production, then the Contractor shall relinquish the said discovery comprising
the geological feature (as outlined by the relevant seismic data) in which the
discovery islocated;
(v) if Contractor informs TPDC that, in its opinion,
utilizing Best International Petroleum Industry Practices, the discovery is of
eventual commercial interest orpresent commercial interest, the Contractor
shall submit to TPDC an application to the Minister for declaration of a Location
to meet the requirement of Section 33, and the Minister shall declare a
Location within thirty (30) days from the date of such application. The
Minister shall be advised to agree to declare for a Location to allow the
Contractor to retain the Discovery Block and not more than eight (8) adjoining
blocks within the exploration area
(vi) If no application for a Location is made within one
hundred and twenty days (120)
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days, the Contractor shall be deemed to have surrendered
the discovery to TPDC.
(vii) within one hundred and eighty (180) days from the
date of such discovery submit to the TPDC the Appraisal Programme and budget
for the determination of the Advisory Committee to meet the requirements of
Section 34 of the Act.
(viii) within thirty (30) days following its submission
of the Appraisal Program, the Advisory Committee shall convene to discuss and
approve the Appraisal Programme;
(ix) where a Location has been declared by the Minister
and in accordance to Section 34 of the Act, the Appraisal period shall be
within three (3) years in the case of Crude Oil and four (4) years in the case
of Natural Gas to ensure that the Appraisal Programme can be carried out and
the results thereof assessed to enable an application to be made by TPDC for a
Development Licence within the same period.
(b) Contractor shall conduct the approved Appraisal
Programme immediately after being granted a Location.
(c) Contractor shall reassess and inform TPDC and the
Minister in accordance to Section 34(3) of the Act the commerciality of the
discovery every one (1) year from the date of notification that the discovery
is of Eventual Interest based on the same economic criteria as set out in
Article 9(a)(iv)(a); in case of further discoveries that could be tied and
developed together in order to make economies of scale.
(d) During the conduct of the Appraisal Programme, the
Contractor shall provide TPDC with all information enabling it to make a
detailed examination of the data relating to the discovery so as to make an
ongoing assessment in full understanding of the facts as to whether or not the
discovery is likely to be capable of being commercially exploited. This information
shall be provided promptly but in any case no more than thirty (30) days prior
to the expiry of each year during the execution of the Appraisal Programme.
(e) If the results of Contractor's Appraisal Programme
determine that the discovery is no longer of potential commercial interest, the
provisions of sub article (j) and (p) of this Article shall apply.
(f) Within ninety (90) days from the date on which the
said Appraisal Programme related to the discovery is completed, the Contractor
shall prepare and submit to TPDC a report containing the results of the
Appraisal Programme for consideration by the Advisory Committee. The Appraisal
Programme report shall include all available technical and economic data
relevant to a determination of commerciality, including but not limited to,
geological and geophysical conditions, such as structural configuration,
physical properties and the extent of reservoir rocks, areas, thickness and
depth of pay zones, pressure, volume and temperature analysis of the reservoir
fluids; preliminary estimates of Crude Oil and Natural Gas reserves; recovery
drive characteristics; anticipated production performance per reservoir and per
well; fluid characteristics, including gravity, sulphur percentage, sediment
and water percentage and
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refinery assay pattern. The report shall also include,
technical and economic feasibility studies relating to processing and transport
of petroleum from the Location.
(g) If the results of Contractor's re-assessment
determine that the discovery has become of Present Interest, the provisions of
sub articles (k), to (o) of this Article shall apply.
(h) If, upon the expiry of three (3) years in the case of
Crude Oil and four (4) years in the case of Natural Gas from the date of
notification that the discovery is of Eventual Interest, the results of
Contractor's reassessment determine that the discovery is still of Eventual
Interest and TPDC does not agree with such determination, TPDC may, at any time
prior to the expiry of the three (3) years for the case of Crude Oil and four
(4) years for the case of Natural Gas dispute the results of the Contractor's
reassessment. If TPDC and the Contractor cannot resolve such dispute within
sixty (60) days of the date on which TPDC informed the Contractor of its
opinion, then the matter shall be referred to the Technical Expert and the
Technical Expert shall determine whether the discovery is of (a) Present
Interest; or (b) Eventual Interest. Determination of the commerciality of the
discovery shall be carried out within one hundred and eighty (180) days. The
Technical Expert shall notify TPDC and the Contractor of its findings and:
A.
wheretheTechnicalExpertdeterminesthatthediscoveryisnolongerofpotentialcomm
ercialinterestthe provisions of sub-article (o) and (p) of this Article shall
apply;
B. where the Technical Expert determines that the
discovery is of Present Interest and the Contractor agrees with such
determination, the provisions of sub-articles (j) to (l) of this Article shall
apply;
C. where the Technical Expert determines that the
discovery is of Present Interest and the Contractor disagrees with such
determination, then the Contractor shall relinquish said discovery comprising
the geological feature (as outlined by the relevant seismic data in which the
discovery is located; or
D. where the Technical Expert determines that the
discovery is still of Eventual Interest, the Contractor may retain the
discovery for the remainder of the Exploration Term.
(i) Where the Contractor has relinquished a discovery pursuant
to sub article (h) (C) of this Article and TPDC decides to appraise and develop
such discovery, the Parties will meet and discuss in good faith the development
of said discovery such that it does not impact the exploration, appraisal and
development of the remainder of the Contract Area.
(j) Where, Contractor (a) pursuant to sub article (a) of
this Article, has informed TPDC that, in its opinion the discovery is of
present commercial interest, or (b) pursuant to sub article (h)(B) of this
Article the Contractor agrees with the determination of the Technical Expert
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that the discovery is of present commercial interest,
Contractor shall:
(i) Within one
hundred and eighty (180) days after the declaration of commerciality pursuant
to sub-article (j), draw up a proposal for a Development Plan in consultation
with TPDC which shall accompany the application for a Development Licence per
the requirements of Section 35(1) of the Act (ii)
(iii) be designed to ensure the recovery of the maximum
quantity of Petroleum from the proposed Development Area which the economics of
the Development shall justify and it shall be designed in compliance with best
international petroleum industry practices;
(iv) contain detailed information on matters of economic,
financial, geological, reserves, technical, operational, health, safety and
environment in accordance to Section 36 of the Act, including:
(a) a description of development strategy and concept;
(b) an economic assessment of the different development
methods, estimated investments , operational costs and selection criteria;
(c) a plan covering the total development to the extent
possible where the development is proposed in two or more phases;
(d) an assessment of capacities of facilities;
(e) assessment of possibilities for tie-ins, third party
access and unitization;
(f) area studies for the possibility of co-ordination of
Petroleum Operations;
(g) proposed drilling and well completion plans;
(h) geological parameters and reservoir engineering
methodology;
(i) facilities for production, storage, transportation
and delivery of Petroleum;
(j) information on facilities for utilisation or
processing of Petroleum;
(k) the relevant Delivery Point(s);
(l) an assessment and presentation of the possible
outlets for Natural Gas from the discovery in question, both on the local
market and for export, together with an evaluation of the necessary means for
its marketing, with due consideration to the sale and marketing of the
Government’s Profit Gas;
(m) a development schedule;
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(n) a long term production schedule;
(o) a description of technical solutions including
possible solutions for enhanced recovery of petroleum;
(p) solutions aimed at efficient use of energy, and the
prevention and minimisation of environmentally harmful discharges, flaring and
emissions;
(q) a method for disposal and use of associated gas where
applicable;
(r) information on systems for ensuring compliance,
including information on the planning, organization and implementation of the
development;
(s) information on operation and maintenance;
(t) a financing plan for the development;
(u) a description of fiscal metering systems;
(v) Petroleum marketing plan;
(w) a health and safety compliance system and plan;
(x) an emergency preparedness and environmental risk
management plan;
(y) information on site-clean up, abandonment,
decommissioning and disposal of facilities; a decommissioning plan in such
detail as the Minister requires, including a calculation of the decommissioning
costs, the annual amount in the decommissioning fund, and the proposal for
financing of the decommissioning obligation;
(z) information on any applications for permits and
licenses required pursuant to applicable legislation in connection with
Petroleum Operations related to the
Development Plan;
(aa) a local content compliance system and plan including
an employment and recruitment programme and a technology and know-how transfer
plan;
(bb)a security management system and plan for protection
against deliberate attack; and
(cc) any other matter which the Minister may direct to be
included in the Development Plan
(v) TPDC may within ninety (90) days of receipt of the
Contractor's Development Programme, make proposals or amendments on the
Contractor's Development programme to the extent that the Development programme
meet the requirements of Section 36 of the Act;
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(k)
When an application for a Development Licence inrespect of a Location is made in accordance with
the Act then, unless the Contractor is In Default at the time of such
application, within sixty (60) days the Minister shall grant pursuant to
Section 37(1)(a) of the Act, on such conditions as are necessary for
theDevelopment Licence.
(l) The Development Licence so granted pursuant to
Section 37(1)(a) of theAct, shall, be infull satisfaction of the requirements
of Section 40(1) and (2)of the Act, incorporate by reference the obligations of
the Contractor as set out in Article 18 (“Lifting, Marketing and Domestic
Supply Obligation”) of the PSA.The provisions of Article 18 of the PSA shall
apply to both Crude Oil and Natural Gas.
In circumstances where the Parties determine to undertake
the gas commercialization project in accordance with the terms and conditions
set out in this Agreement, the Contractor in consultation with TPDC shall, in
respect of the domestic market obligation and Section 40(2) of the Act, employ
a suitably qualified international independent consultant(s) to prepare a
reserve assessment report to determine the:
(i) Proven and certified gas reserves in the Block
(“ProvenReserves”); (ii) The minimum amount of gas required for a gas
commercialization project; and (iii) The amount of Proven Reserves that are to
be dedicated for the domestic market.
Following receipt of such report, the consultant shall
notify the Contractor and TPDC in writing of the Proven Reserves that are to be
dedicated for supply to the gas commercialization project from the Block
(the“AccessibleProvenReserves”) and the amount of Proven Reserves that are to
be dedicated for the domestic market (the "Domestic Market
Quantity").
(m) Contractor shall respectively provide TPDC with at
least 90 days prior written notice before dedicating to a third party available
capacity in the Pipeline or Gas Processing Plant that would have the effect of
reducing or excluding TPDC’s ability to transport and process all or any
portion of the daily maximum quantity volume through the Pipeline and the Gas
Processing Plant. TPDC will consider the effect of such an action to the
domestic daily maximum deliverable volume prior to approval.
(n) Natural Gas for the Domestic Market Quantity and
Natural Gas for the Accessible Proven Reserves for the gas commercialization
project shall be lifted at the Delivery Point proportionately, subject to
normal operational requirements, it being understood that lifting shall be
consistent with the Natural Gas lifting schedule for the gas commercialization
project and domestic market and shall take into account the delivery
obligations of both the gas commercialization project and domestic market.
(o) If Contractor
informs TPDC that in its opinion the discovery is not of potential commercial
interest then the Contractor shall
surrender forthwith its rights and be relieved of its
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obligations in respect of the Block or Blocks comprising
the geological feature (as outlined by the relevant seismic data) in which the
discovery is located.
(p) Where pursuant to sub-article (o) of this Article,
Contractor has surrendered its rights and been relieved of its obligations in
respect of any Block or Blocks in which the discovery is located,
notwithstanding that the said Block or Blocks continue to be subject to the
Exploration Licence referred to in sub-article (b) of Article 3, the said Block
or Blocks shall not for the purpose of this Agreement, constitute part of the
Contract Area.
(q) The Contractor shall not perform any Petroleum
Operations with reference to the proposed Development prior to approval of the
Development Plan upon granting of the Development Licence, save where the
Minister has granted an express permission to enter into specific activities.
(r) The Contractor shall, together with the Development
Plan accompanying the application for the Development License, submit evidence
that the Contractor has undertaken a prior social and environmental impact assessment
study relevant for the proposed Development and a copy of the social and
environmental impact assessments study. In addition, the Contractor shall
submit the necessary environmental authorisations pursuant to the Law
(s) Any deviations or alterations to the Development Plan
or significant alterations to the Development facilities shall require the
prior written approval of the Minister. The Contractor shall promptly notify
the Minister and TPDC of any significant deviation from the assumptions and preconditions
on which the Development Licence with the Development Plan has been submitted
or approved. The Ministers may propose changes or modifications to the
Development Plan.
(t) The Minister may set conditions for approval of the
Development Licence as accompanied with the Development Plan, including that Petroleum shall be transported in
specified transportation systems and shall be landed at specific locations.
Full 120 Page PDF Document TPDC Model Production Share Agreement